What does it mean to be an innovator in today’s global banking industry? It’s no longer just about digital but more about connecting customers with their banks in a seamless, omnichannel fashion in order to solve specific problems and issues, according to judges in the BAI-Finacle Global Banking Innovation Awards 2014.
“In prior years, we saw many submissions celebrating a bank’s initial leap to digital banking,” says Matt Calman, managing director of Charlotte, N.C.-based Calman & Co. LLC and a former top technology executive at Bank of America Corp. “Many more of this year’s submissions were targeted at solving a particular customer problem, such as wait time, mobile offers, payments, savings and financial planning.”
Calman was a member of a panel of 10 judges who evaluated over 220 submissions from 170 institutions worldwide in this year’s program. The others are: Abonty Banerjee, head of digital channels for ICICI Bank, Mumbai, India; Sandeep Deobhakta, head of personal business banking, Africa, for Standard Bank, Johannesburg, South Africa; Bill Hippensteel, chief content officer, BAI; Jan Hendrik Kraus, former general manager, group strategy, Emirates NBD in Dubai; Adrian Li, deputy chief executive, The Bank of East Asia, Hong Kong; Benjami Puigdevall, head of electronic channels for Barcelona-based CaixaBank; Aixa Manelli, chief information officer, Buenos Aires-based Banco Itau Argentina; Steve Monaghan, regional director and head of Edge (Innovation) for Hong Kong-based AIA; and David Passavant, senior vice president, banking innovation center director, Pittsburgh-based PNC Bank.
The winners will be announced on November 12 at BAI Retail Delivery 2014 in Chicago. Here are the judges’ comments on the finalists and the climate for retail banking innovation worldwide:
Q: What’s the state of innovation in retail banking globally in 2014? Have you noticed any changes/differences from previous years? Are banks more or less willing to invest in innovation? Are there any forces still holding them back, such as the economy or regulation?
Calman: Banks are widening the types of innovative offerings as mobile and related digital technologies create new touchpoints for customers. There are two differences from previous years. First, more banks deconstruct their digital experiences, going from complex do-everything apps to simpler, functional apps that solve a particular customer problem. Second, we’re seeing more omnichannel plays, where digital technology is merged with human interactions to enrich the customer experience.
The most restrictive force in any bank’s ability to innovate is its own funding and governance environment; banks that can create a track for innovative initiatives to compete for internal resources on an even footing with traditional initiatives will always deliver more innovative solutions to their customers.
Passavant: We’re seeing banks accelerate investment in innovation as the global economy continues to improve. Banks are being pushed globally by consumer adoption of digital technology, particularly mobile tech.
Regulation is always a consideration in any banking market, but the main force that is holding banks back is legacy systems, processes and organization structures that tend to stifle innovation rather than drive it. We saw several great examples of banks overcoming these legacy forces in this year’s award applicants.
Kraus: Restricted Information Technology (IT) investment budgets and legacy systems are still reasons why some banks can’t move as fast as others. In some regions, you can see the gap widening between leaders and followers. A major issue that limits or slows down innovation continues to be the silos within the organization, especially between channels, IT and marketing.
Hippensteel: Banks are definitely more willing to invest in innovation as seen by the increase in banks participating in the awards program. This year, we received more submissions in the channel and internal process categories whereas last year the bulk emphasized product and service innovation. This shift could be attributed to more focus on delivering an omnichannel experience to customers. Silos, regulations and technology investments are all reasons for holding companies back, but the other is a true cultural embrace of innovation. There are definitely some institutions that present amazing innovations year after year. And that is not by accident.
Li: I feel that last year’s momentum has continued and that the pace of innovation in retail banking has accelerated globally in 2014. While cost cutting is still on the agenda, banks seem to be more willing to invest in new payment methods, operational efficiency, customer satisfaction and big data.
Monaghan: Innovation is accelerating. There is a lot more bold experimentation. The industry is beginning to realize the urgency with which they must face non-bank competitors.
Deobhakta: The one thing that did stand out for me this year was the sheer amount of effort and investment in mobile capability in terms of channels and payments. It is clear that the leading banks have completely embraced the change and are investing heavily in the capability required to service customers through mobile capability.
Manelli: Overall, I’ve noticed an increased focus on innovation as a way to differentiate from the competition. It’s no longer considered a nice-to-have effort but a must-have practice to be able to compete effectively.
Q: When you were evaluating the proposals and determining the list of finalists, did you notice any trends in the type or category of innovations being submitted? In general, what are these companies trying to accomplish with their innovations?
Monaghan: It was great to see omnichannel becoming a norm. Clearly we are seeing innovative banks increasingly focused on design and customer experience. The increasing use of data to create value for customers was another theme.
Manelli: I think the theme this year is trying to integrate different outcomes in the same solution, i.e., focusing on onmichannel platforms but also aiming for enhanced process efficiency. Banks are starting to match and merge different initiatives and innovation areas to achieve holistic solutions that improve the customer experience while at the same time attacking internal efficiency. Mobile is still king from a channel perspective but we’re looking at new ways to engage current and prospective customers.
Calman: In prior years, we saw many submissions celebrating a bank’s initial leap to digital banking. Many more of this year’s submissions were targeted at solving a particular customer problem, such as wait time, mobile offers, payments, savings and financial planning. Many of this year’s innovations reflect the industry’s shift to a “digital first” approach.
Kraus: It is very obvious that innovation leaders don’t restrict innovation to one particular area but holistically look at products, services and processes. While channel and product (especially on the payment/mobile wallet side) innovations are most visible from a customer perspective, banks are increasingly innovating “behind the scenes” and use the technology capabilities to ensure an enhanced delivery of products and services. There is also an increased focus on driving targeted actions with clear benefits by combining analytics with digital to drive proactive rather than reactive responses to customer needs.
Li: One trend I noticed this year was the adoption of the latest applications for mobile and wearable devices (e.g. smartglasses, smartwatches and activity trackers) in a number of submissions. These devices will be essential tools in the next wave of electronic banking, allowing banks to fulfil the needs of tech-savvy customers.
Passavant: This year we see familiar themes gaining momentum, specifically mobile technology, omnichannel customer experience, next-gen authentication and leveraging large datasets to tailor individual customer experiences and offers. Our industry had been discussing these themes for a while but we saw significant ground taken in the past year by banks actually delivering products and services on these themes.
Puigdevall: I have noticed an innovation trend in two areas where it seems that banking entities are focusing their efforts and resources: multichannel integration for commercial purposes and mobility services. Providing a real multichannel experience in all possible contexts to maximize the number of interactions with clients is becoming a priority. Banks also understand the potential of new mobile and wearable technologies for their clients.
Deobhakta: Some of the banks are really ahead of the curve in investing heavily in mobile capability and seem to be willing to test and learn with every new device. I am particularly excited to see a lot more banks using the principles of Human Centered Design (HCD) or Design Thinking in building their offerings and designing the customer experience. This takes customer centricity to a new level.
Hippensteel: There was a definite emphasis on improving the customer experience regardless of which channel is used. We saw innovations in mobile and banking as well as in contact centers. There is a tremendous focus on digital, social media and client experience. Many banks are talking about these topics and trying to integrate their solutions, but many of the winners are executing and finding success.
Q: Based on your experience judging these awards this year, are you more or less optimistic about the state of the retail banking industry worldwide?
Kraus: I am generally more optimistic. I think banks have understood that they can’t be successful in the long-term if they don’t deliver against customer expectations. Customer flexibility has increased significantly and the younger generation especially won’t stick around if they feel their needs are not being met. The increased competition pushes the industry overall to improve service and product delivery. Customers will easily detect whether “customer centricity” and “service excellence” are purely marketing buzzwords or core beliefs that the bank is focusing on.
Li: I am incredibly optimistic about the state of the global retail banking industry. Huge efforts are already being made towards paperless, digital banking and, if banks embrace the challenges ahead, we should see a significant drop in operating costs.
Passavant: I’m optimistic. It’s exciting to see banks across the world putting customer experience at the center of innovative product and service offerings. It’s also exciting to see some of the innovative startup work in the retail banking space. I see some incumbent banking players figuring out ways to partner with small startups, either to use their technology or create joint product offerings, and expect to see more of that in the coming year.
Puigdevall: I have an optimistic view of the state of the banking industry around the world after seeing the projects presented. This year, I have noticed a significant increase in the diversity of innovations presented.
Manelli: I’m highly optimistic because, year after year, it’s becoming more obvious the banking industry is finally shifting from a traditional transaction-based approach to a customer-centric approach.
Monaghan: The future remains bright for those banks committed to a digital future. However, overall, the industry globally is not moving fast enough. While the pace of change is accelerating, few banks are responding with making agility a core competency. Banks must look at digital economics and principles and apply them to the core of their operations.
Hippensteel: I’m definitely optimistic based on the increasing number of banks around the world that are submitting their innovations. Industry interest in innovation is increasing. I really hope that many organizations will take the time to look at these innovations and become inspired by this exceptional work.
Calman: I am more optimistic than ever. At last we’ve seen the breakthrough event in mobile payments with Apple’s embrace of near field communications, which I expect will unlock mobile payments well beyond the Apple ecosystem. I can’t wait to see what 2015 brings.
Mr. Cline is managing editor of BAI Banking Strategies and can be reached at email@example.com.